8-K
EPLUS INC (PLUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 5, 2025
ePlus inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34167 | 54-1817218 |
|---|---|---|
| (State or other jurisdiction <br><br> of incorporation) | (Commission <br><br> File Number) | (IRS Employer <br><br> Identification No.) |
13595 Dulles Technology Drive
Herndon, Virginia 20171-3413
(Address of principal executive offices, including zip code)
(703) 984-8400
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | PLUS | NASDAQ Global Market Select |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On February 5, 2025, ePlus inc. announced by press release (the “Press Release”) its results of operations for its three and nine months ended December 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A reconciliation of GAAP results and non-GAAP financial measures is available in the Press Release that is attached hereto as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are filed as part of this report:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated February 5, 2025, issued by ePlus inc. |
| 104 | Cover Page Interactive Data File (embedded<br> within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ePlus inc. | |
|---|---|
| By: /s/ Elaine D. Marion | |
| Elaine D. Marion | |
| Chief Financial Officer | |
| Date: February 5, 2025 |
EXHIBIT 99.1
ePlus Reports Third Quarter and First Nine Months Results
Third Quarter Gross Profit Increased 5.3% And Gross Margin Expanded Year Over Year
| Third Quarter Fiscal Year 2025 | |
|---|---|
| • | Net sales increased 0.4% to $511.0 million; technology business net sales declined 0.2% to $493.1 million; service revenues increased 52.2% to $113.6<br> million. |
| • | Technology business gross billings increased 6.6% to $849.5 million. |
| • | Consolidated gross profit increased 5.3% to $140.9 million. |
| • | Consolidated gross margin was 27.6%, compared with 26.3% last year. |
| • | Net earnings decreased 11.5% to $24.1 million. |
| • | Adjusted EBITDA decreased 15.2% to $39.1 million. |
| • | Diluted earnings per share decreased 10.8% to $0.91. Non-GAAP diluted earnings per share decreased 10.2% to $1.06. |
| First Nine Months of Fiscal Year 2025 | |
| --- | --- |
| • | Net sales decreased 6.0% to $1,570.7 million; technology business net sales decreased 6.7% to $1,521.9 million; service revenues increased 38.6% to<br> $295.5 million. |
| • | Technology business gross billings decreased 0.2% to $2,491.5 million. |
| • | Consolidated gross profit increased 0.7% to $423.4 million. |
| • | Consolidated gross margin was 27.0%, compared with 25.2% last year. |
| • | Net earnings decreased 11.7% to $82.8 million. |
| • | Adjusted EBITDA decreased 12.5% to $134.4 million. |
| • | Diluted earnings per share decreased 11.9% to $3.10. Non-GAAP diluted earnings per share decreased 10.8% to $3.56. |
HERNDON, VA – February 5, 2025 – ePlus inc. (NASDAQ: PLUS), a leading provider of technology and financing solutions, today announced financial results for the three months and nine months ended December 31, 2024.
Management Comment
“Our third quarter results reflect the benefit of our investment in services and the continuing industry shift toward ratable, subscription and ‘as a service’ revenue recognition,” said Mark Marron, president and CEO of ePlus. “Our services business, driven by organic and inorganic growth, increased 52% in the third quarter, across both managed and professional services. We are also benefitting from acquisitions completed over the past two years which have enhanced our suite of service offerings. This strong services performance in our technology business, however, was offset by lower product sales and a higher proportion of netted down product revenues given the acceleration of the industry shift underway.
“Technology business gross billings increased 6.6% underscoring solid customer demand for our suite of solutions offerings. Consolidated gross profit increased 5.3% and consolidated gross margin expanded 130 basis points, on a lower revenue base as we benefitted from higher proportion of netted down revenues, and increased contribution from higher margin services. We continue to maintain our strong positioning in the fast-growing categories that our customers require and our strong balance sheet positions us well to advance our organic and inorganic growth strategy over time.”
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Third Quarter Fiscal Year 2025 Results
For the third quarter ended December 31, 2024, as compared to the third quarter ended December 31, 2023:
Consolidated net sales increased 0.4% to $511.0 million, from $509.1 million.
Technology business net sales declined slightly to $493.1 million, from $494.2 million, as lower product sales were offset by higher service revenues. Technology business gross billings increased 6.6% to $849.5 million, from $797.0 million.
Product sales declined 9.5% to $379.5 million, from $419.5 million and, product margin was 22.1%, up from 21.9% last year, both due to a higher proportion of third-party maintenance, software subscriptions, and services sold in the current quarter, which are recorded on a net basis. Product sales to certain enterprise customers at lower overall margins decreased product margins but was offset by contribution from the netted down revenues.
Professional service revenues increased 73.6% from last year to $69.5 million, from $40.0 million, primarily due to the acquisition of Bailiwick Services, LLC. Gross margins declined to 40.1%, from 43.3% due to a shift in the mix of services provided.
Managed service revenues increased 27.5% to $44.2 million due to ongoing growth in these offerings, including Enhanced Maintenance Support and Cloud services. Gross profit from managed services increased 19.5% from last year due to the increase in revenues. Managed service margins declined to 29.8%, from 31.8%.
Financing business segment net sales increased 19.8% to $17.8 million primarily due to increased proceeds from sales of equipment. Gross profit in the financing business segment increased $2.3 million, from $13.5 million last year to $15.8 million this year, due to the increase in net sales.
Consolidated gross profit increased 5.3% to $140.9 million, from $133.8 million. Technology business gross profit increased 4.0% to $125.0 million due to increased gross profit from the professional and managed services segments offset by a decline in gross profit from the product segment. The financing business segment gross profit increased 16.9% to $15.8 million. Consolidated gross margin was 27.6%, compared with 26.3% last year.
Operating expenses were $112.4 million, up 17.3% from $95.8 million last year, primarily due to increases in salaries and benefits from additional headcount. Our headcount at the end of the third quarter of fiscal year 2025 was 2,291, up 394 from a year ago, due to the acquisition of Bailiwick Services, LLC on August 19, 2024, and Peak Resources on January 27, 2024. Of the 394 additional employees, 355 were customer facing employees.
Consolidated operating income decreased 25.1% to $28.5 million and earnings before tax decreased 16.3% to $32.2 million. Other income was $3.7 million compared to $0.4 million last year due to higher interest income and foreign currency transaction gains.
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Our effective tax rate for the current quarter was 25.0%, lower than the prior year quarter of 29.0%, primarily due to lower state taxes.
Net earnings decreased 11.5% to $24.1 million.
Adjusted EBITDA in the technology business declined 25.1% and increased 23.1% in the financing business segment, and when combined, resulted in a consolidated decrease of 15.2% to $39.1 million.
Diluted earnings per share was $0.91, compared with $1.02 in the prior year quarter. Non-GAAP diluted earnings per share was $1.06, compared with $1.18 in the prior year quarter.
First Nine Months of Fiscal Year 2025 Results
For the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023:
Consolidated net sales decreased 6.0% to $1,570.7 million, from $1,670.8 million.
Technology business net sales decreased 6.7% to $1,521.9 million, from $1,631.8 million, due to lower product sales, offset by higher service revenues. Technology business gross billings decreased 0.2% to $2,491.5 million, from $2,495.5 million.
Product sales decreased 13.5% to $1,226.4 million, from $1,418.6 million, due to declines in customer demand, as well as a shift in mix. Gross profit from product segment sales decreased 11.7% to $271.9 million, from $308.1 million, due to lower sales combined with a shift in mix towards third-party maintenance and services, which are recorded on a net basis.
Professional service revenues increased 48.1% primarily due to the acquisition of Bailiwick Services, LLC. Gross margins declined slightly to 40.8% from 42.0% for the same period in the prior year.
Managed service revenues increased 27.7% to $126.8 million, from $99.3 million, due to ongoing growth in these offerings, including Enhanced Maintenance Support, Cloud and Service Desk services. Gross profit from managed services increased 23.6% to $38.3 million, from $31.0 million, due to the increase in revenues. Gross margins declined slightly to 30.2% from 31.2% last year.
Financing business segment net sales increased 24.9% to $48.8 million, from $39.1 million, due to higher transactional gains and portfolio earnings offset by lower post-contract earnings. Gross profit in the financing business segment increased $10.7 million primarily due to the increase in sales.
Consolidated gross profit increased to $423.4 million, from $420.4 million. Consolidated gross margin was 27.0%, compared with last year’s gross margin of 25.2%, due to higher product margins.
Operating expenses were $316.7 million, up 8.7% from $291.2 million last year, primarily due to increases in salaries and benefits and general and administrative costs, both of which were due to increases in personnel. The increase in depreciation and amortization was due to the acquisition of Bailiwick Services, LLC.
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Consolidated operating income decreased 17.4% to $106.7 million. Earnings before tax decreased 13.0% to $113.0 million. Other income was $6.3 million compared to $0.7 million last year, primarily due to higher interest income.
Our effective tax rate for the current year period was 26.7%, slightly lower than last year’s 27.8%.
Net earnings decreased 11.7% to $82.8 million.
Adjusted EBITDA decreased 12.5% to $134.4 million.
Diluted earnings per common share was $3.10 for the nine months ended December 31, 2024, compared with $3.52 in the prior year. Non-GAAP diluted earnings per common share was $3.56, compared with $3.99 in the prior year.
Balance Sheet Highlights
As of December 31, 2024, cash and cash equivalents increased slightly to $253.1 million, from $253.0 million as of March 31, 2024, as cash generated from operations was used for working capital needs, the acquisition of Bailiwick Services, LLC and repurchases of our common stock. Inventory decreased 29.1% to $99.0 million compared with $139.7 million as of March 31, 2024. Total stockholders’ equity as of December 31, 2024 was $962.3 million, compared with $901.8 million as of March 31, 2024. Total shares outstanding were 26.7 million as of December 31, 2024, and 27.0 million as of March 31, 2024.
Fiscal Year 2025 Guidance
Fiscal year 2025 net sales are now expected to be in the range of $2.07 billion to $2.11 billion, and the adjusted EBITDA range is now expected to be $165.0 million to $171.0 million. ePlus cannot predict with reasonable certainty and without unreasonable effort, the ultimate outcome of unusual gains and losses, the occurrence of matters creating GAAP tax impacts, fluctuations in interest expense or interest income and share-based compensation, and acquisition-related expenses. These items are uncertain, depend on various factors, and could be material to the ePlus' results computed in accordance with GAAP. Accordingly, ePlus is unable to provide a reconciliation of GAAP net earnings to adjusted EBITDA for the full year 2025 forecast.
Summary and Outlook
“Looking ahead, we are excited about the opportunities we see in areas including AI, cybersecurity and cloud, and are confident in our strategy of investing in these faster growth offerings. We will continue to prioritize investments in these areas as we build upon our broad suite of solutions. Importantly, our cash position is strong and our balance sheet is healthy which provides flexibility to support our growth initiatives, including organic growth in customer facing headcount and acquisitions,” concluded Mr. Marron.
Recent Corporate Developments/Recognitions
In the third quarter, ePlus:
| o | Achieved ISO 9001 Certification |
|---|---|
| o | Launched Secure GenAI Accelerator |
| --- | --- |
| o | Additionally, effective January 3, 2025, ePlus welcomed Melissa Ballenger as a new member of the Board of Directors. |
| --- | --- |
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Conference Call Information
ePlus will hold a conference call and webcast at 4:30 p.m. ET on February 5, 2025:
| Date: | February 5, 2025 |
|---|---|
| Time: | 4:30 p.m. ET |
| Audio Webcast (Live & Replay): | https://events.q4inc.com/attendee/412924671 |
| Live Call: | (888) 596-4144 (toll-free/domestic) |
| (646) 968-2525 (international) | |
| Archived Call: | (800) 770-2030 (toll-free/domestic) |
| (609) 800-9909 (international) | |
| Conference ID: | 5394845# (live call and replay) |
A replay of the call will be available approximately two hours after the call through February 12, 2025. A transcript of the call will also be available on the ePlus Investor Relations website at https://www.eplus.com/investors.
About ePlus inc.
ePlus is a customer-first, services-led, and results-driven industry leader offering transformative technology solutions and services to provide the best customer outcomes. Offering a full portfolio of solutions, including artificial intelligence, security, cloud and data center, networking, and collaboration, as well as managed, consultative and professional services, ePlus works closely with organizations across many industries to successfully navigate business challenges. With a long list of industry-leading partners and more than 2,200 employees, our expertise has been honed over more than three decades, giving us specialized yet broad levels of experience and knowledge. ePlus is headquartered in Virginia, with locations in the United States, United Kingdom, Europe, and Asia‐Pacific. For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com. Connect with ePlus on LinkedIn, X, Facebook, and Instagram.
ePlus, Where Technology Means More^®^.
ePlus^®^ and ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc. in the United States and/or other countries. The names of other companies and products mentioned herein may be the trademarks of their respective owners.
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Forward-looking statements
Statements in this press release that are not historical facts may be deemed to be “forward-looking statements,” including, among other things, statements regarding the future financial performance of ePlus. Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, exposure to fluctuation in foreign currency rates, interest rates, and inflation, including as a result of national and international political instability fostering uncertainty and volatility in the global economy, which may cause increases in our costs and wages and our ability to increase prices to our customers, negative impacts to the arrangements that have pricing commitments over the term of an agreement and/or the loss of key lenders or constricting credit markets as a result of changing interest rates, which may result in adverse changes in our results of operations and financial position; significant adverse changes in our relationship with one or more of our larger customer accounts or vendors, including decreased account profitability, reductions in contracted services, or a loss of such relationships; a material decrease in the credit quality of our customer base, or a material increase in our credit losses, including by the federal government’s actual or attempted termination for convenience, other contract termination or non-performance; our ability to remain secure during a cybersecurity attack or other information technology (“IT”) outage, including disruptions in our, our vendors or other third party’s IT systems and data and audio communication networks; our ability to secure our own and our customers’ electronic and other confidential information, while maintaining compliance with evolving data privacy and regulatory laws and regulations and appropriately providing required notice and disclosure of cybersecurity incidents when and if necessary; ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely and our ability to adequately train our personnel to prevent a cyber event; the possibility of a reduction of vendor incentives provided to us; our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel by recruiting and retaining highly skilled, competent personnel, and vendor certifications; risks relating to use or capabilities of artificial intelligence (“AI”) including social and ethical risks; our ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors; changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”), software as a service (“SaaS”), platform as a service (“PaaS”), and AI; supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, or increase our need for working capital, or delay completing professional services, or purchasing IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results; our inability to identify acquisition candidates, perform sufficient due diligence prior to completing an acquisition, successfully integrate a completed acquisition, or identify an opportunity for or successfully completing a business disposition, may affect our earnings; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or our floor plan facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price; our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies; and other risks or uncertainties detailed in our reports filed with the Securities and Exchange Commission. All information set forth in this press release is current as of the date of this release and ePlus undertakes no duty or obligation to update this information either as a result of new information, future events or otherwise, except as required by applicable U.S. securities law.
Contact:
Kleyton Parkhurst, SVP
ePlus inc.
kparkhurst@eplus.com
703-984-8150
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| ePlus inc. AND SUBSIDIARIES | ||
|---|---|---|
| UNAUDITED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except per share amounts) | ||
| December 31, 2024 | March 31, 2024 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $253,074 | $253,021 |
| Accounts receivable—trade, net | 594,175 | 644,616 |
| Accounts receivable—other, net | 62,280 | 46,884 |
| Inventories | 99,021 | 139,690 |
| Financing receivables—net, current | 148,758 | 102,600 |
| Deferred costs | 67,945 | 59,449 |
| Other current assets | 51,445 | 27,269 |
| Total current assets | 1,276,698 | 1,273,529 |
| Financing receivables and operating leases—net | 87,636 | 79,435 |
| Deferred tax asset | 6,087 | 5,620 |
| Property, equipment and other assets--net | 104,778 | 89,289 |
| Goodwill | 202,794 | 161,503 |
| Other intangible assets—net | 87,783 | 44,093 |
| TOTAL ASSETS | $1,765,776 | $1,653,469 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Current liabilities: | ||
| Accounts payable | $313,046 | $315,676 |
| Accounts payable—floor plan | 115,744 | 105,104 |
| Salaries and commissions payable | 52,727 | 43,696 |
| Deferred revenue | 154,273 | 134,596 |
| Non-recourse notes payable—current | 24,173 | 23,288 |
| Other current liabilities | 36,848 | 34,630 |
| Total current liabilities | 696,811 | 656,990 |
| Non-recourse notes payable—long-term | 9,622 | 12,901 |
| Other liabilities | 97,003 | 81,799 |
| TOTAL LIABILITIES | 803,436 | 751,690 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY | ||
| Preferred stock, $0.01 per share par value; 2,000 shares<br><br> <br>authorized; none outstanding | - | - |
| Common stock, $0.01 per share par value; 50,000 shares<br><br> <br>authorized; 26,703<br> outstanding at December 31, 2024 and<br><br> <br>26,952 outstanding at<br> March 31, 2024 | 276 | 274 |
| Additional paid-in capital | 192,087 | 180,058 |
| Treasury stock, at cost, 880 shares at December 31, 2024 and<br><br> <br>447 shares at March 31, 2024 | (57,639) | (23,811) |
| Retained earnings | 825,760 | 742,978 |
| Accumulated other comprehensive income—foreign currency<br><br> <br>translation adjustment | 1,856 | 2,280 |
| Total Stockholders' Equity | 962,340 | 901,779 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,765,776 | $1,653,469 |
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| ePlus inc. AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended December 31, | Nine Months Ended December 31, | |||
| 2024 | 2023 | 2024 | 2023 | |
| Net sales | ||||
| Product | $397,318 | $434,371 | $1,275,172 | $1,457,636 |
| Services | 113,647 | 74,684 | 295,503 | 213,205 |
| Total | 510,965 | 509,055 | 1,570,675 | 1,670,841 |
| Cost of sales | ||||
| Product | 297,434 | 328,908 | 959,027 | 1,116,046 |
| Services | 72,646 | 46,337 | 188,291 | 134,347 |
| Total | 370,080 | 375,245 | 1,147,318 | 1,250,393 |
| Gross profit | 140,885 | 133,810 | 423,357 | 420,448 |
| Selling, general, and administrative | 104,181 | 89,381 | 296,760 | 272,331 |
| Depreciation and amortization | 7,676 | 5,399 | 18,260 | 15,821 |
| Interest and financing costs | 517 | 983 | 1,639 | 3,054 |
| Operating expenses | 112,374 | 95,763 | 316,659 | 291,206 |
| Operating income | 28,511 | 38,047 | 106,698 | 129,242 |
| Other income (expense), net | 3,650 | 366 | 6,302 | 673 |
| Earnings before taxes | 32,161 | 38,413 | 113,000 | 129,915 |
| Provision for income taxes | 8,028 | 11,131 | 30,218 | 36,122 |
| Net earnings | $24,133 | $27,282 | $82,782 | $93,793 |
| Net earnings per common share—basic | $0.91 | $1.02 | $3.12 | $3.53 |
| Net earnings per common share—diluted | $0.91 | $1.02 | $3.10 | $3.52 |
| Weighted average common shares outstanding—basic | 26,495 | 26,618 | 26,568 | 26,598 |
| Weighted average common shares outstanding—diluted | 26,620 | 26,697 | 26,727 | 26,665 |
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| Technology Business | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |
| (in thousands) | (in thousands) | |||||
| Net sales | ||||||
| Product | $379,472 | $419,478 | (9.5%) | $1,226,397 | $1,418,581 | (13.5%) |
| Professional services | 69,497 | 40,044 | 73.6% | 168,676 | 113,870 | 48.1% |
| Managed services | 44,150 | 34,640 | 27.5% | 126,827 | 99,335 | 27.7% |
| Total | 493,119 | 494,162 | (0.2%) | 1,521,900 | 1,631,786 | (6.7%) |
| Gross profit | ||||||
| Product | 84,046 | 91,919 | (8.6%) | 271,910 | 308,059 | (11.7%) |
| Professional services | 27,841 | 17,332 | 60.6% | 68,879 | 47,852 | 43.9% |
| Managed services | 13,160 | 11,015 | 19.5% | 38,333 | 31,006 | 23.6% |
| Total | 125,047 | 120,266 | 4.0% | 379,122 | 386,917 | (2.0%) |
| Selling, general, and administrative | 100,441 | 86,001 | 16.8% | 284,575 | 261,694 | 8.7% |
| Depreciation and amortization | 7,676 | 5,381 | 42.7% | 18,260 | 15,747 | 16.0% |
| Interest and financing costs | - | 217 | (100.0%) | - | 1,428 | (100.0%) |
| Operating expenses | 108,117 | 91,599 | 18.0% | 302,835 | 278,869 | 8.6% |
| Operating income | $16,930 | $28,667 | (40.9%) | $76,287 | $108,048 | (29.4%) |
| Gross billings | $849,546 | $796,986 | 6.6% | $2,491,482 | $2,495,451 | (0.2)% |
| Adjusted EBITDA | $27,498 | $36,725 | (25.1%) | $103,803 | $132,170 | (21.5)% |
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| Technology Business Gross Billings by Type | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |
| (in thousands) | (in thousands) | |||||
| Networking | $214,762 | $251,322 | (14.5%) | $716,087 | $839,638 | (14.7%) |
| Cloud | 207,762 | 181,559 | 14.4% | 644,888 | 641,120 | 0.6% |
| Security | 190,808 | 189,476 | 0.7% | 506,256 | 480,159 | 5.4% |
| Collaboration | 22,381 | 23,180 | (3.4%) | 102,074 | 97,111 | 5.1% |
| Other | 76,513 | 55,473 | 37.9% | 193,650 | 203,805 | (5.0%) |
| Product gross billings | 712,226 | 701,010 | 1.6% | 2,162,955 | 2,261,833 | (4.4%) |
| Service gross billings | 137,320 | 95,976 | 43.1% | 328,527 | 233,618 | 40.6% |
| Total gross billings | $849,546 | $796,986 | 6.6% | $2,491,482 | $2,495,451 | (0.2%) |
| Technology Business Net Sales by Type | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |
| (in thousands) | (in thousands) | |||||
| Networking | $181,367 | $209,936 | (13.6%) | $602,883 | $723,760 | (16.7%) |
| Cloud | 116,864 | 120,253 | (2.8%) | 375,431 | 427,365 | (12.2%) |
| Security | 53,919 | 58,822 | (8.3%) | 143,133 | 156,504 | (8.5%) |
| Collaboration | 8,391 | 13,608 | (38.3%) | 47,278 | 53,647 | (11.9%) |
| Other | 18,931 | 16,859 | 12.3% | 57,672 | 57,305 | 0.6% |
| Total product | 379,472 | 419,478 | (9.5%) | 1,226,397 | 1,418,581 | (13.5%) |
| Professional services | 69,497 | 40,044 | 73.6% | 168,676 | 113,870 | 48.1% |
| Managed services | 44,150 | 34,640 | 27.5% | 126,827 | 99,335 | 27.7% |
| Total net sales | $493,119 | $494,162 | (0.2%) | $1,521,900 | $1,631,786 | (6.7%) |
| Technology Business Net Sales by Customer End Market | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |
| (in thousands) | (in thousands) | |||||
| Telecom, Media, & Entertainment | $126,201 | $139,551 | (9.6%) | $352,624 | $405,192 | (13.0%) |
| SLED | 71,412 | 60,108 | 18.8% | 261,195 | 264,419 | (1.2%) |
| Technology | 71,293 | 83,951 | (15.1%) | 235,387 | 268,302 | (12.3%) |
| Healthcare | 58,670 | 55,504 | 5.7% | 212,185 | 214,182 | (0.9%) |
| Financial Services | 46,217 | 38,816 | 19.1% | 130,701 | 174,391 | (25.1%) |
| All other | 119,326 | 116,232 | 2.7% | 329,808 | 305,300 | 8.0% |
| Total net sales | $493,119 | $494,162 | (0.2%) | $1,521,900 | $1,631,786 | (6.7%) |
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| Financing Business Segment | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |
| (in thousands) | (in thousands) | |||||
| Portfolio earnings | $4,466 | $3,701 | 20.7% | $13,491 | $10,113 | 33.4% |
| Transactional gains | 8,477 | 8,107 | 4.6% | 24,272 | 16,335 | 48.6% |
| Post-contract earnings | 4,743 | 2,685 | 76.6% | 10,163 | 11,357 | (10.5%) |
| Other | 160 | 400 | (60.0%) | 849 | 1,250 | (32.1%) |
| Net sales | 17,846 | 14,893 | 19.8% | 48,775 | 39,055 | 24.9% |
| Gross profit | 15,838 | 13,544 | 16.9% | 44,235 | 33,531 | 31.9% |
| Selling, general, and administrative | 3,740 | 3,380 | 10.7% | 12,185 | 10,637 | 14.6% |
| Depreciation and amortization | - | 18 | (100.0%) | - | 74 | (100.0%) |
| Interest and financing costs | 517 | 766 | (32.5%) | 1,639 | 1,626 | 0.8% |
| Operating expenses | 4,257 | 4,164 | 2.2% | 13,824 | 12,337 | 12.1% |
| Operating income | $11,581 | $9,380 | 23.5% | $30,411 | $21,194 | 43.5% |
| Adjusted EBITDA | $11,651 | $9,464 | 23.1% | $30,612 | $21,466 | 42.6% |
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ePlus inc. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
We included reconciliations below for the following non-GAAP financial measures: (i) Adjusted EBITDA, (ii) Adjusted EBITDA for business segments, (iii) non-GAAP Net Earnings and (iv) non-GAAP Net Earnings per Common Share - Diluted.
We define Adjusted EBITDA as net earnings calculated in accordance with US GAAP, adjusted for the following: interest and financing costs, depreciation and amortization, share-based compensation, acquisition related expenses, provision for income taxes, and other income (expense). Adjusted EBITDA presented for the technology business segments and the financing business segment is defined as operating income calculated in accordance with US GAAP, adjusted for interest and financing costs, share-based compensation, acquisition related expenses, and depreciation and amortization. We consider the interest on notes payable from our financing business segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation.
Non-GAAP net earnings and non-GAAP net earnings per common share – diluted are based on net earnings calculated in accordance with GAAP, adjusted to exclude other (income) expense, share based compensation, acquisition related expenses, and acquisition related amortization expenses, and the related tax effects.
We use the above non-GAAP financial measures as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that such non-GAAP financial measures provide management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results.
Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, non-GAAP net earnings and non-GAAP net earnings per common share or similarly titled measures differently, which may reduce their usefulness as comparative measures.
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| Three Months Ended December 31, | Nine Months Ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| (in thousands) | ||||
| Consolidated | ||||
| Net earnings | $24,133 | $27,282 | $82,782 | $93,793 |
| Provision for income taxes | 8,028 | 11,131 | 30,218 | 36,122 |
| Share based compensation | 2,933 | 2,526 | 8,385 | 7,145 |
| Acquisition related expenses | 29 | - | 1,072 | - |
| Interest and financing costs | - | 217 | - | 1,428 |
| Depreciation and amortization [1] | 7,676 | 5,399 | 18,260 | 15,821 |
| Other (income) expense, net [2] | (3,650) | (366) | (6,302) | (673) |
| Adjusted EBITDA | $39,149 | $46,189 | $134,415 | $153,636 |
| Technology Business Segments | ||||
| --- | --- | --- | --- | --- |
| Operating income | $16,930 | $28,667 | $76,287 | $108,048 |
| Share based compensation | 2,863 | 2,460 | 8,184 | 6,947 |
| Depreciation and amortization [1] | 7,676 | 5,381 | 18,260 | 15,747 |
| Acquisition related expenses | 29 | - | 1,072 | - |
| Interest and financing costs | - | 217 | - | 1,428 |
| Adjusted EBITDA | $27,498 | $36,725 | $103,803 | $132,170 |
| Financing Business Segment | ||||
| --- | --- | --- | --- | --- |
| Operating income | $11,581 | $9,380 | $30,411 | $21,194 |
| Share based compensation | 70 | 66 | 201 | 198 |
| Depreciation and amortization [1] | - | 18 | - | 74 |
| Adjusted EBITDA | $11,651 | $9,464 | $30,612 | $21,466 |
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| Three Months Ended December 31, | Nine Months Ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| (in thousands) | ||||
| GAAP: Earnings before taxes | $32,161 | $38,413 | $113,000 | $129,915 |
| Share based compensation | 2,933 | 2,526 | 8,385 | 7,145 |
| Acquisition related expenses | 29 | - | 1,072 | - |
| Acquisition related amortization expense [3] | 5,983 | 3,856 | 14,180 | 11,348 |
| Other (income) expense [2] | (3,650) | (366) | (6,302) | (673) |
| Non-GAAP: Earnings before provision for income taxes | 37,456 | 44,429 | 130,335 | 147,735 |
| GAAP: Provision for income taxes | 8,028 | 11,131 | 30,218 | 36,122 |
| Share based compensation | 734 | 733 | 2,263 | 2,005 |
| Acquisition related expenses | 7 | - | 300 | - |
| Acquisition related amortization expense [3] | 1,495 | 1,115 | 3,788 | 3,173 |
| Other (income) expense, net [2] | (913) | (106) | (1,656) | (190) |
| Tax benefit (expense) on restricted stock | 21 | 10 | 513 | 226 |
| Non-GAAP: Provision for income taxes | 9,372 | 12,883 | 35,426 | 41,336 |
| Non-GAAP: Net earnings | $28,084 | $31,546 | $94,909 | $106,399 |
| Three Months Ended December 31, | Nine Months Ended December 31, | |||
| --- | --- | --- | --- | --- |
| 2024 | 2023 | 2024 | 2023 | |
| GAAP: Net earnings per common share – diluted | $0.91 | $1.02 | $3.10 | $3.52 |
| Share based compensation | 0.08 | 0.07 | 0.23 | 0.19 |
| Acquisition related expenses | - | - | 0.03 | - |
| Acquisition related amortization expense [3] | 0.17 | 0.10 | 0.39 | 0.30 |
| Other (income) expense, net [2] | (0.10) | - | (0.17) | (0.01) |
| Tax benefit (expense) on restricted stock | - | (0.00) | (0.02) | (0.01) |
| Total non-GAAP adjustments – net of tax | 0.15 | 0.16 | 0.46 | 0.47 |
| Non-GAAP: Net earnings per common share – diluted | $1.06 | $1.18 | $3.56 | $3.99 |
| [1] Amount consists of depreciation and amortization for assets used internally. | ||||
| --- | ||||
| [2] Interest income and foreign currency transaction gains and losses. | ||||
| [3] Amount consists of amortization of intangible assets from acquired businesses. |
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